Shinhan Investment Corp Faces Heavy Loss Amid ETF Mismanagement
Shinhan Investment Corp disclosed that it incurred a substantial loss of approximately 130 billion KRW while acting as a liquidity provider for Exchange-Traded Funds (ETFs). This incident was caused by an employee who engaged in abnormal futures trading to secure additional profits. To conceal the loss, the company falsely recorded it as a swap transaction, which was later detected by Shinhan's internal monitoring system. The loss, surpassing 2% of the company's consolidated self-capital, was promptly reported to financial authorities, highlighting its severity.
This event has severely damaged Shinhan's credibility, shedding light on the critical need for transparency and robust internal controls among ETF managers and liquidity providers. Incorrect derivatives trading and attempts to falsify records have exposed the high risk and complexity inherent in managing ETFs. Shinhan Investment Corp is currently conducting a thorough internal audit of the incident and is contemplating legal action if deemed necessary.
Furthermore, the incident raises warning flags about market volatility and the limitations of existing monitoring systems. With losses amounting to 130% of the previous year's net profit, the repercussions on the broader ETF market are expected to be significant. The articles consistently report that the events transpired between August 2 and October 10, underscoring the necessity of a careful investigation by financial regulatory bodies.
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'Asked to Provide Liquidity but Traded Futures'… Shinhan Securities Faces 130 Billion Won Loss Related to ETFs - Seoul Economy NewspaperSecurities > Domestic Stock Market News: Shinhan Investment Corp. incurred a loss of approximately 130 billion won due to futures trading that deviated from the purpose in the process of operating as a liquidity provider (LP) for exchange-traded funds (ETFs)...
조선일보2024 10月 13
Shinhan Investment Corp. incurring 130 billion KRW in ETF LP operation losses - Chosun IlboShinhan Investment Corp. faced a financial incident related to ETF Exchange-Traded Fund futures trading resulting in an operational loss of approximately 130 billion KRW. According to the financial investment industry on the 13th, Shinhan Investment Corp. encountered these losses through in-market futures trades and settlements on the 11th.
Shinhan Investment Corp, ETF Operational Loss of 130 Billion KRW…“Under Internal Audit” - Maeil Business NewspaperAfter the drastic fluctuations in domestic and international stock markets in August, liquidity provider incurred losses during operations and disguised futures trading as swap transactions, “Legal actions under review after internal audit”
Growing LP Suspicion... Shinhan Investment Corp. Incurs 130 Billion Won Loss from 'Futures Trading' - Prime Economy[Prime Economy] Shinhan Investment Corp. incurred massive losses, revealing inappropriate management practices as a liquidity provider (LP) for Exchange Traded Funds (ETFs). Suspicions about illegal short selling surrounding Shinhan Investment Corp. as an LP have been raised for some time, and this incident further tarnishes its credibility. According to the financial investment industry as of the 13th, Shinhan Investment Corp. engaged in futures trading on the 10th and...